Heritable Property – Title Conditions – Variation – Very large penthouse flat in development of flats and offices in former warehouses – Deed of Conditions – Prohibition against sub-division – Proposed sub-division into 2 penthouse flats – Alleged difficulty in selling or letting – Whether transient market conditions relevant – Concerns of resident body at precedent and weakening status of Deed of Conditions – Whether reasonable to grant application – Title Conditions (Scotland) Act 2003, Sections 98, 100

Title Conditions – Variation or Discharge – Expenses – Successful applicants – Whether Tribunal’s former practice still applicable – Principles to be applied – Limited extent of application clear from outset – Whether resident body’s wish to avoid precedent and preserve status of Deed of Conditions relevant – Failure to establish difficulty in selling or letting – Award modified to one half – Title Conditions (Scotland) Act 2003, Section 103(1)

Donnelly & Regan v Mullen & Ors
17 February and 1 September 2006

Former whisky warehouses were converted into flats and offices, with an extensive Deed of Conditions inter alia prohibiting sub-division of flats. The developer had created an extremely large penthouse flat on two floors for his own use. This property had a chequered ownership history including a fire which had reduced it to a shell. The applicants had bought and expensively renovated it. They sought variation to permit them to sub-divide this property into two penthouses each of which would still be larger than even the other penthouses at the development, with each paying a full share of common charges. They claimed that efforts to sell, or let, the property had been unsuccessful as a result of its size. A high percentage of the flat owners objected on the grounds that a precedent would be created for the sub-division of smaller flats into single apartments and additional pressure on, in particular, parking. They were also concerned about weakening the status of the Deed of Conditions and making estate management, including management of the residents’ leisure centre, more difficult.

On expenses, the application having been successful, the respondents argued that Section 103(1) of the Title Conditions (Scotland) Act 2003 left the Tribunal with a discretion and the previous practice of not normally awarding expenses against unsuccessful benefited proprietors could still be followed, the more so because of the introduction of the automatic granting of consent in unopposed cases. They had sought guarantees that the agreement of the residents’ committee would not be treated as a precedent. The applicants’ emphasis on a change in the property market and marketing difficulties confirmed their fears that a precedent could be created.

Held (1) granting the application, the Tribunal were not persuaded on the evidence that the applicants had been unable to sell the property because of its size, there having been a number of other factors involved. Market conditions, as such, did not amount to relevant changes in circumstances. However, the sheer size and uniqueness of the flat were such as to make allowing the sub-division reasonable. It would not create any precedent. The importance, in the consideration of the factors set out in Section 100 of the Act, of the purpose of the title condition was emphasised. This was to prevent the creation of more and smaller flats in order to preserve the concept and balance of the development, but this sub-division would have a very limited, if any, effect on the facilities and amenity of the development. The burden of not being able to sub-divide, an entirely reasonable development of this very unusual property, outweighed the benefit to the other residents of insisting on the title condition in relation to this property.

(2) On expenses, it could not be accepted that the new statutory provision allowed continuation of the Tribunal’s former practice: Parliament must be taken to have intended a change. The rule that ‘expenses follow success’, being an application of the general principle that expenses should be borne by the person who caused them, might however apply slightly differently in the case of benefited proprietors, who generally have not caused the expense of making the application, so that expenses would not normally be awarded where applications were not opposed. It would also be possible to reflect divided success and mark disapproval of any conduct, for example applying in far too wide terms, which might have added to the expense and made opposition, for a time at least, justified. In the present case, the limited extent of the application had been clear from the outset. The respondents’ concern about precedent was understandable but not relevant, being an aspect of their unsuccessful argument. However, the applicants had maintained as a large plank in their case, creating substantial expense, their claim, which had been rejected by the Tribunal, in relation to attempts to sell the property. Reflecting the expense also caused thereby to the respondents, it was appropriate to modify the award of expenses to one half.

Authorities referred to:-

Main v Lord Doune 1972 SLT (Lands Tr) 14
Murrayfield Ice Rink v SRU 1972 SLT (Lands Tr) 20
Bolton v Aberdeen Corporation 1972 SLT (Lands Tr) 26
Alison v Dunbar LTS/LO/1983/25
Lothian Regional Council v George Wimpey & Co Ltd 1985 SLT (Lands Tr) 2
Biggerstaff v SSPCA & Ors LTS/LO/1990/17, 25.10.1990
British Steel PLC v Kaye 1991 SLT (Lands Tr) 7
Miller Group v Gardener’s Exrs 1992 SLT (Lands Tr) 62
Alexandra Workwear plc v Lothian Regional Council LTS/LO/1991/102
Ord v Mashford & Ors LTS/LO2004/16, 10.3.2005
George Wimpey East Scotland Ltd v Fleming & Ors LTS/LO/2004/19, 12.1.2005
Church of Scotland General Trs v McLaren & Anr LTS/LO/2004/17,18, 16.3.2005

See full decision:  LTS/TC/2005/01 (Merits) and LTS/TC/2005/01 (Expenses)